Opportunity Cost The next best alternative foregone when making a decision. If X>Y, choose X, otherwise EcMan is being irrational.
|
|
- Alexandrina Williams
- 6 years ago
- Views:
Transcription
1 Econ 191 Part 1: Introduction to the Economic Approach Microeconomics how individual workers, consumers and firms act and interact in markets -an act is a choice (made under free will) -choice is subject to constraints -fundamental constrain is scarcity leads to trade-offs One of the biggest trade-offs in an economy is efficiency (maximising yield from resources) vs. equality (distributing benefits uniformly among society's members) Basic Building Blocks 1: Choice -Economics is about how individuals make choice (choice theory); sociology is about how individuals don't have choices to make (class theory) BBB2: Scarcity 1) Time constraints 2) Resource constraints 3) Spatial constraints: can't be in two places at once 4) Human constraints: limits to our individual physical and psychological capacities The notion of rational choice Economics relies upon the powerful but limited concept of rational behaviour A rational agent (EcMan) is a decision maker who: 1) can figure out the likely consequences of their actions 2) has a well established set of tastes 3) wants to use their figuring competency to make the choice that will maximise personal utility (best satisfy their tastes) Opportunity Cost The next best alternative foregone when making a decision. If X>Y, choose X, otherwise EcMan is being irrational. Sunk costs Sunk costs have no opportunity cost. The results of past decisions that you cannot change now are called sunk costs Normative vs positive Normative: 'what you should do' Positive: 'this is how people actually behave' Summary of the Economic Problem Need to answer: WHAT to produce, HOW to produce it and FOR WHOM to produce Specialisation Absolute advantage: when you can produce more of a good than another party Comparative advantage: when you have a lower opportunity cost of producing a good than another party, meaning you are RELATIVELY better at producing it; op cost calculated by sacrifice/gain Just because you are better at something doesn't mean you should COMPLETELY specialise. Specialising leads to the production of MORE, which is unambiguously better. However there must be trade for this to be useful, otherwise they will be worse off.
2 What will be done with the surplus produce depends on the tastes and the bargaining power of the two parties. Product possibility frontier -over time we can invest in more 'capital' -over time we can discover better ways of doing things This increases productivity, and the PPF shifts out Productivity gains from specialisation The statement that there won't be gains from specialisation without comparative advantage relies on the assumption that productivity is constant. In many real world production situations, specialisation will lead to increases in productivity. Gains from division of labour Part 2: Supply and Demand: How markets work Demand Demand as price increases, quantity demanded of a good increases, ceteris paribus, vica versa Quantity demanded the amount of a good/service that customers are willing and able to purchase at a given price Demand schedule table showing the relationship of price and QD Demand curve a graphed line or curve showing the same Market demand the demand by all the consumers of a good/service Demand a movement along the demand curve -change in price of a good will lead to a change in QD -such a change represents a MOVEMENT along the curve Demand shifts in the curve -caused by any change that alters the quantity demanded at each price Caused by: -consumer income (assuming the good is normal, as Y increases, D increases) -prices of related goods -tastes -expectations (e.g. demand would fall if prices are expected to fall in the future) -number of buyers Why does the law of demand hold true? As we consume more of something the 'utility' (the pleasure/satisfaction derived from consuming it) decreases. We call additional units marginal units. The law depends on diminishing marginal utility, and as consume more, we are not willing to pay as much for each marginal unit. Supply The basic idea: if the price of a good is higher, then producing it will be more profitable, so more firms will enter the market, and each will wish to expand production. The law of supply is often interfered with. A change in price leads to a change in the quantity supplied, i.e. movement along the curve. A shift of the curve left or right is due to a change in a determinant of supply OTHER than price.
3 Non-price factors affecting supply Input prices anything that goes into the production process (e.g. labour, electricity, materials) Technology generally will shift curve to the right Expectations if the prices of inputs is expected to rise, you will purchase them now and increase supply Number of sellers WHY would the supply curve slope upwards? Because additional 'marginal' units of output may cost more to produce, meaning a higher price is needed to justify putting them on the market. This is because after a while, it costs more to produce a unit (e.g. paying workers overtime). Therefore to get that money back (make the same profit), price must increase. Rising marginal costs Rising prices Inflation this does not always occur however... Economies of scale As the size of the business increases, the AVERAGE COST PER UNIT may decrease. At a certain stage, diseconomies may occur. -purchasing/marketing economies -technological -risk-bearing -managerial -financial The price mechanism The market price is found where supply and demand meet; that is Q.d. = Q.s. We know this will MOST LIKELY happen, as both supply and demand are affected by price, and they slope in opposite directions Surplus When P > Ep; therefore Qs > Qd Naturally, suppliers will lower the price to increase sales, moving towards equilibrium Shortage When P < Ep; therefore Qs < Qd Naturally, suppliers should raise the price, moving towards equilibrium Law of supply and demand The claim that the price of any good adjusts to bring the quantity supplied and the quantity demanded into balance. This will happen naturally, by individual suppliers and demanded making the profitable response to the supply/demand inbalance THE INVISIBLE HAND Independent suppliers and demanders can respond in turn to 'mistakes' such that the mistakes get smaller and smaller; the process is mediated by changes in the market clearing price. The market clearing rule: short side wins The tatonnement process diagram on page 17 of Part 2 of coursebook
4 Essentially, this shows the 'cobweb' effect of initially a price that is too high, which is then dropped, then raised, and dropped, until an equilibrium is found, without a surplus or shortage Market equilibrium In reality, supply and demand are always changing, so equilibrium will never last forever. Equilibrium is broken by a change in either supply and/or demand Three steps to analysing the changes in equilibrium 1)Decide whether the event shifts the supply or demand curve, or both 2)Decide which direction the curve shifts 3)Use the diagram to see how the shift effects Pe and Qe. The affect of price when demand or supply shift If both curves move to the right, then the amount traded unambiguously rises, however the effect on price, we cannot be certain about. S=D is not guaranteed Having demand slope downwards and supply slope upwards is helpful. But 1)it can occur with a downward sloping supply curve 2)it cannot occur if supply and demand do not intersect Elasticity -measures the strength of the relationship of any two variables -one variable has a causal (not casual) effect on the other Price Elasticity of Demand % Q.d./% P Note: the midpoint method can be used, which uses the average of the changing values e.g. Original Q.d. Is 10, new q.d. Is 8; original price is 2.00, new price is 2.20 [10-8/(10+8)/2] / [2.2-2/2.2+2]/2] Inelastic demand Where q.d. Does not respond strongly to a change in price; PED <1 Elastic demand Where q.d. Does strongly respond to a change in price; PED >1 Perfectly inelastic q.d. Does not respond at all to price changes; vertical graph Perfectly elastic q.d. Goes to infinity or zero with any change in price Unit elastic % in Q.d. = % in P Because PED measures the responsiveness of q.d. To price, it is closely related to the demand curve, BUT IT IS NOT THE SAME THING AS SLOPE. This curve is relatively INELASTIC, due to its steep slope.
5 Halfway along the curve, at the midpoint, the PED is 1. Elastic is above, inelastic is below. Application of PED PED is used to calculate TR, which is price x the quantity Inelastic and TR If PED is inelastic, increase the price to increase TR. Consumers are willing to pay more as the good is a need/necessity. If you have INELASTIC DEMAND, increasing prices will ALWAYS increase profits. Elastic and TR If PED is elastic, lower the price to increase TR. Consumers are price sensitive, and their quantity demanded will increase. [Note: in the long run, PED is MORE elastic, as people are able to find alternatives/substitutes] Income Elasticity of Demand Measures the change in Q.d. in response to a change in incomes. % Q.d./% Y Normal goods regarded as necessities are income inelastic, and have an elasticity of between 0 and 1. Normal goods regarded as luxuries are income elastic, and have an elasticity of greater than 1. Inferior goods have a negative YED.
6 Cross Price Elasticity of Demand Measures the response of Q.d. Of one good changes when the price of another good changes. % Q.d. of good X/% P of good Y. Substitutes can be used in place of each other, therefore their XED will probably be positive. Complements can be used together, therefore their XED will probably be negative. Price Elasticity of Supply The responsiveness of the quantity supplied to a change in price. % in Qs/% in P [Note, the PED will always be positive for an upward sloping supply curve] What determines the PES: -the ability of sellers to change the amount they produce -time period (time to adjust); for almost every good, supply is more elastic in the long run Applications of Elasticity e.g. Can good news for farming be bad news for farmers? If new crops are found that can increase a farmers yield, this may actually be harmful to them, if supply and demand curves are relatively INELASTIC, leading to a FALL in TR. e.g. Why did OPEC fail to keep the price of oil rise? In the short term, the demand for oil is relatively INELASTIC. However, in the long term it is relatively more elastic as people can look for substitutes Part 3: Firms & The Organisation of Markets Assume a firms single goal is to maximise profits Profit = (PxQ) (ACxQ) or Profit = Q(P-AC) and: 1. we know from the law of demand that P and Q will move in opposite directions 2. But we don't know the relationship between AC and Q; could be positive or negative So we can immediately deduce that profit maximising does not in general mean: 1. maximising profit margins (P-AC) 2. maximising quantity sold (Q) 3. maximising sales revenue (TR) 4. minimising total costs (TC) Costs Costs are a function of output. They can be explicit (cash) or implicit (e.g. opportunity cost) TC = wn (where w is the daily wage rate, and N is the number of employees) The Production Function we link N to Q through the production function: Q = f(n) [we will be implicitly assuming what economists call technical efficiency - meaning the value of Q given by the function is the maximum achievable for each level of N]
Week 1 (Part 1) Introduction Econ 101
Week 1 (art 1) Introduction Econ 101 reliminary Concepts (Chapter 2 g 38-41 & 47-50) Economics is the study of how individuals and societies choose to use scarce resources that nature and previous generations
More information2007 Thomson South-Western
Elasticity... allows us to analyze supply and demand with greater precision. is a measure of how much buyers and sellers respond to changes in market conditions THE ELASTICITY OF DEMAND The price elasticity
More information1.3. Levels and Rates of Change Levels: example, wages and income versus Rates: example, inflation and growth Example: Box 1.3
1 Chapter 1 1.1. Scarcity, Choice, Opportunity Cost Definition of Economics: Resources versus Wants Wants: more and better unlimited Versus Needs: essential limited Versus Demand: ability to pay + want
More informationIntroduction Question Bank
Introduction Question Bank 1. Science of wealth is the definition given by 2. Economics is the study of mankind of the ordinary business of life given by 3. Science which tells about what it is & what
More informationWEEK 4: Economics: Foundations and Models
WEEK 4: Economics: Foundations and Models Economics: study of the choices people and societies make to attain their unlimited wants, given their scarce resources Market: group of buyers and seels of good
More informationElasticity and Its Applications. Copyright 2004 South-Western
Elasticity and Its Applications 5 Copyright 2004 South-Western Copyright 2004 South-Western/Thomson Learning Elasticity... allows us to analyze supply and demand with greater precision. is a measure of
More informationChapter 6 Elasticity: The Responsiveness of Demand and Supply
hapter 6 Elasticity: The Responsiveness of emand and Supply 1 Price elasticity of demand measures: how responsive to price changes suppliers are. how responsive sales are to changes in the price of a related
More informationElasticity and Its Applications
Elasticity and Its Applications 1. In general, elasticity is a. a measure of the competitive nature of a market. b. the friction that develops between buyer and seller in a market. c. a measure of how
More information1. Demand: willingness to buy a good or service and the ability to pay for it; how much of an item an individual is willing to purchase at each price
1. Demand: willingness to buy a good or service and the ability to pay for it; how much of an item an individual is willing to purchase at each price 2. The two things needed for demand to exist are: willingness
More information+ What is Economics? societies use scarce resources to produce valuable commodities and distribute them among different people
ECONOMICS The word economy comes from a Greek word oikonomia for one who manages a household. is the study of how society manages its scarce resources. Traditionally land, labor, and capital resources
More informationEC1010 Introduction to Micro Economics (Econ 6003)
Cork Institute of Technology (Institiuid Teicneolaiochta Chorcai) Alternative Semester 1 Examination 2007/2008 (Winter 2007) EC1010 Introduction to Micro Economics (Econ 6003) (Time: 2 Hours) External
More informationLaw of Supply. General Economics
Law of Supply General Economics Supply Willing to Offer to the Market at Various Prices during Period of Time Able to Offer to the Market at Various Prices during Period of Time General Economics: Law
More informationAP Microeconomics Review With Answers
AP Microeconomics Review With Answers 1. Firm in Perfect Competition (Long-Run Equilibrium) 2. Monopoly Industry with comparison of price & output of a Perfectly Competitive Industry (which means show
More informationTheRevisionGuide (www.therevisionguide.com) is a free online resource for Economics and Business Studies.
TheRevisionGuide.com Accelerating your potential Economics Revision AS Economics Demand Notes by: Apsara Sumanasiri Student Name : Date:. TheRevisionGuide (www.therevisionguide.com) is a free online resource
More information1 of 14 5/1/2014 4:56 PM
1 of 14 5/1/2014 4:56 PM Any point on the budget constraint Gives the consumer the highest level of utility. Represent a combination of two goods that are affordable. Represents combinations of two goods
More informationPrinciples of MicroEconomics: Econ102
Principles of MicroEconomics: Econ102 Price Elasticity of Demand: The responsiveness of the quantity demanded to a change in price, measured by dividing the percentage change in the quantity demanded of
More informationCHAPTER 2: DEMAND AND SUPPLY
2.3 THE MARKET CHAPTER 2: DEMAND AND SUPPLY CIA4U Ms. Schirk A market can be: A physical place where goods are bought and sold A collective reference to all the buyers and sellers of a particular good
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. FIGURE 1-2
Questions of this SAMPLE exam were randomly chosen and may NOT be representative of the difficulty or focus of the actual examination. The professor did NOT review these questions. MULTIPLE CHOICE. Choose
More informationSupply and Demand. Objective 8.04
Supply and Demand Objective 8.04 Supply and Demand Pages 258-259 259 copy bold terms and give a definition or description of each. Page 261 Copy the questions Worksheet A-2A 1. Surplus When the amount
More informationWJEC (Eduqas) Economics A-level
WJEC (Eduqas) Economics A-level Microeconomics Topic 2: Demand and Supply in Product Markets 2.4 Price, income and cross price elasticities of demand and supply Notes Price elasticity of demand The price
More informationThe law of supply states that higher prices raise the quantity supplied. The price elasticity of supply measures how much the quantity supplied
In a competitive market, the demand and supply curve represent the behaviour of buyers and sellers. The demand curve shows how buyers respond to price changes whereas the supply curve shows how sellers
More information2010 Pearson Education Canada
What Is Perfect Competition? Perfect competition is an industry in which Many firms sell identical products to many buyers. There are no restrictions to entry into the industry. Established firms have
More informationChapter 4 DEMAND. Essential Question: How do we decide what to buy?
Chapter 4: Demand Section 1 Chapter 4 DEMAND Essential Question: How do we decide what to buy? Key Terms demand: the desire to own something and the ability to pay for it law of demand: consumers will
More information1.2.3 Price, Income and Cross Elasticities of Demand
1.2.3 Price, Income and Cross Elasticities of Demand Price elasticity of demand The price elasticity of demand is the responsiveness of a change in demand to a change in price. The formula for this is:
More informationnot to be republished NCERT Chapter 6 Non-competitive Markets 6.1 SIMPLE MONOPOLY IN THE COMMODITY MARKET
Chapter 6 We recall that perfect competition was theorised as a market structure where both consumers and firms were price takers. The behaviour of the firm in such circumstances was described in the Chapter
More informationSubmit your scantron and questions sheet
PRINT YOUR NAME Exam 1 Submit your scantron and questions sheet Version A 1. Scarcity means that A) what we can produce with our resources is greater than our material wants B) resources are unlimited
More informationVANCOUVER ISLAND UNIVERSITY. ECON211: Principles of Microeconomics, Spring 2013 SAMPLE MIDTERM EXAM. Name (Last, First): ID #: Signature:
Important: Please remember it is a sample exam. Number of questions in each section and structure of questions in Part B would vary as discussed in class VANCOUVER ISLAND UNIVERSITY ECON211: Principles
More information.the key ideas. Webnote 122
.the key ideas. 1 Webnote 122 yed-income demand xed-cross demand pes-supply ped-demand 4 alternative elasticities Some key points to note for your answerability Webnote 123 2 Yed-income elasticity of demand
More informationMultiple Choice Part II, A Part II, B Part III Total
SIMON FRASER UNIVERSITY ECON 103 (2007-2) MIDTERM EXAM NAME Student # Tutorial # Multiple Choice Part II, A Part II, B Part III Total PART I. MULTIPLE CHOICE (56%, 1.75 points each). Answer on the bubble
More informationECON 2306 Test #1 PREVIEW SHEET Ten Fundamental Principles of ECONOMICS 1. Scarcity is inescapable. 2. Risk is unavoidable. 3. All persons must make
ECON 2306 Test #1 PREVIEW SHEET Ten Fundamental Principles of ECONOMICS 1. Scarcity is inescapable. 2. Risk is unavoidable. 3. All persons must make choices. 4. Incentives matter. 5. People generally act
More informationCome & Join Us at VUSTUDENTS.net
Come & Join Us at VUSTUDENTS.net For Assignment Solution, GDB, Online Quizzes, Helping Study material, Past Solved Papers, Solved MCQs, Current Papers, E-Books & more. Go to http://www.vustudents.net and
More informationQuestion Paper Business Economics I (MB1B3): January 2009
Question Paper Business Economics I (MB1B3): January 2009 Answer all 78 questions. Marks are indicated against each question. 1. Which of the following is not responsible for an increase in demand for
More informationEC 201 Lecture Notes 1 Page 1 of 1
EC 201 Lecture Notes 1 Page 1 of 1 ECON 201 - Macroeconomics Lecture Notes 1 Metropolitan State University Allen Bellas The textbooks for this course are Macroeconomics: Principles and Policy by William
More informationOCR Economics A-level
OCR Economics A-level Microeconomics Topic 2: How Competitive Markets Work 2.3 Supply and demand, and the interaction of markets Notes A market is created when buyers and sellers interact. A sub-market
More informationFormula: Price of elasticity of demand= Percentage change in quantity demanded Percentage change in price
1 MICRO ECONOMICS~ CHAPTER FOUR CHAPTER FOUR PRICE ELASTICITY OF DEMAND You know that when supply increases, the equilibrium price falls and the equilibrium quantity increases THE PRICE ELASTICITY OF DEMAND~
More informationExam 01 - ECON Friday, October 1st
Name: ID: A Exam 01 - ECON 2301-05 - Friday, October 1st 1. Demand is said to be inelastic if the a. quantity demanded changes proportionately the same as price. b. quantity demanded changes proportionately
More informationUsing Elasticity to Predict Cost Incidence. A Definition & A Question. Who pays when payroll tax added to wage rate?
Using Elasticity to Predict Cost Incidence A Definition & A Question Definition of Incidence: the fact of falling upon; in this case, where costs fall A Question for you what does a statement like this
More informationEC1010 Introduction to Microeconomics (Econ 6003)
Cork Institute of Technology (Institiuid Teicneolaiochta Chorcai) Bachelor of Business (BBUSS_7_Y1) (BACCT_7_Y1) (BMNGT_7_22) Higher Certificate in Business (BBUSE_6_Y1) (BBUSA_6_Y1) Semester 1 Repeat
More informationCONTENTS. Introduction to the Series. 1 Introduction to Economics 5 2 Competitive Markets, Demand and Supply Elasticities 37
CONTENTS Introduction to the Series iv 1 Introduction to Economics 5 2 Competitive Markets, Demand and Supply 17 3 Elasticities 37 4 Government Intervention in Markets 44 5 Market Failure 53 6 Costs of
More informationPerfect competition: occurs when none of the individual market participants (ie buyers or sellers) can influence the price of the product.
Perfect Competition In this section of work and the next one we derive the equilibrium positions of firms in order to determine whether or not it is profitable for a firm to produce and, if so, what quantities
More informationECO401 All Past Solved Mid Term Papers of ECO401 By
ECO401 All Past Solved Mid Term Papers of ECO401 By http://vustudents.ning.com MIDTERM EXAMINATION Spring 2009 ECO401- Economics (Session - 2) Question No: 1 ( Marks: 1 ) - Please choose one An individual
More informationContents in Brief. Preface
Contents in Brief Preface Page v PART 1 INTRODUCTION 1 Chapter 1 Nature and Scope of Managerial Economics and Finance 3 Chapter 2 Equations, Graphs and Optimisation Techniques 21 Chapter 3 Demand, Supply
More informationEcon 200 Lecture 4 April 12, 2016
Econ 200 Lecture 4 April 12, 2016 0. Learning Catalytics Session 62335486 1. Change in Demand 2. Supply and the Law of Supply 3. Changes in Supply 4. Equilibrium Putting Supply and Demand Together 5. Impact
More information23 Perfect Competition
23 Perfect Competition Learning Objectives After you have studied this chapter, you should be able to 1. define price taker, total revenues, marginal revenue, short-run shutdown price, short-run breakeven
More informationCh. 7 outline. 5 principles that underlie consumer behavior
Ch. 7 outline The Fundamentals of Consumer Choice The focus of this chapter is on how consumers allocate (distribute) their income. Prices of goods, relative to one another, have an important role in how
More informationMonopoly. 3 Microeconomics LESSON 5. Introduction and Description. Time Required. Materials
LESSON 5 Monopoly Introduction and Description Lesson 5 extends the theory of the firm to the model of a Students will see that the profit-maximization rules for the monopoly are the same as they were
More informationAP Microeconomics Chapter 6 Outline
I. Introduction AP Microeconomics Chapter 6 A. Learning Objectives In this chapter students should learn: 1. What price elasticity of demand is and how it can be applied. 2. The usefulness of the total
More informationCHAPTER NINE MONOPOLY
CHAPTER NINE MONOPOLY This chapter examines how a market controlled by a single producer behaves. What price will a monopolist charge for his output? How much will he produce? The basic characteristics
More informationJANUARY EXAMINATIONS 2005
No. of Pages: (A) 7 No. of Questions: 26 EC1000A ' JANUARY EXAMINATIONS 2005 Subject Title of Paper ECONOMICS EC1000 MICROECONOMICS Time Allowed Two Hours (2 Hours) Instructions to candidates This paper
More informationEcon 1 Review Session 1. with Maggie aproberts-warren UCSC Fall 2012
Econ 1 Review Session 1 with Maggie aproberts-warren UCSC Fall 2012 Introduction What will be covered in the exam? Chs. 1-8 What will the exam look like? 20 multiple choice questions 4 short answer/graphing
More informationChapter 1: The Ten Lessons in Economics
Textbook Notes Page 1 Chapter 1: The Ten Lessons in Economics Saturday, 25 May 2013 1:09 PM Economics: The study of how society manages its scarce resources Individual Decision-Making Lesson 1: People
More informationCHAPTER THREE DEMAND AND SUPPLY
CHAPTER THREE DEMAND AND SUPPLY This chapter presents a brief review of demand and supply analysis. The materials covered in this chapter provide the essential background for most of the managerial economic
More informationDemand & Supply of Resources
Resource Markets 1 Demand & Supply of Resources Resource demand Firms demand resources As long as marginal revenue exceeds marginal cost To maximize profit Resource supply People supply resources To the
More informationChapter 6 Elasticity: The Responsiveness of Demand and Supply
Economics 6 th edition 1 Chapter 6 Elasticity: The Responsiveness of Demand and Supply Modified by Yulin Hou For Principles of Microeconomics Florida International University Fall 2017 The Price Elasticity
More informationGraded exercise questions. Level (I, ii, iii)
Graded exercise questions Level (I, ii, iii) 248 MICRO ECONOMICS LEVEL 1 GRADED EXERCISE QUESTIONS (LEVEL I, II, III) INTRODUCTION 1. Why does an economic problem arise? 2. What is economics about? 3.
More informationFramingham State College Department of Economics and Business Principles of Microeconomics 1 st Midterm Practice Exam Fall 2006
Name Framingham State College Department of Economics and Business Principles of Microeconomics 1 st Midterm Practice Exam Fall 2006 This exam provides questions that are representative of those contained
More informationMicro Semester Review Name:
Micro Semester Review Name: The following review is set up to emphasize certain concepts, graphs and terms. It is the responsibility of the individual teachers to emphasize and review the analysis aspects
More informationChapter 28 The Labor Market: Demand, Supply, and Outsourcing
Chapter 28 The Labor Market: Demand, Supply, and Outsourcing Learning Objectives After you have studied this chapter, you should be able to 1. define marginal factor cost, marginal physical product of
More informationFINALTERM EXAMINATION FALL 2006
FINALTERM EXAMINATION FALL 2006 QUESTION NO: 1 (MARKS: 1) - PLEASE CHOOSE ONE Compared to the equilibrium price and quantity sold in a competitive market, a monopolist Will charge a price and sell a quantity.
More informationECON MACROECONOMIC PRINCIPLES Instructor: Dr. Juergen Jung Towson University. J.Jung Chapter Introduction Towson University 1 / 69
ECON 202 - MACROECONOMIC PRINCIPLES Instructor: Dr. Juergen Jung Towson University J.Jung Chapter 2-4 - Introduction Towson University 1 / 69 Disclaimer These lecture notes are customized for the Macroeconomics
More informationUNIT 4 PRACTICE EXAM
UNIT 4 PRACTICE EXAM 1. The prices paid for resources affect A. the money incomes of households in the economy B. the allocation of resources among different firms and industries in the economy C. the
More informationUnderstanding Markets
Understanding Markets EC8005 Lecture 7 2014 Michael King 1 Revision: Consumer Theory 1. Qd = f(p,ps, Pc, Y, T, O) 2. Sd = f(p, T, I, G, Tx, Sy, O) 3. Types of goods 4. Shift along v s shift in demand/supply
More information- Scarcity leads to tradeoffs - Normative statements=opinion - Positive statement=fact with evidence - An economic model is tested by comparing its
Macroeconomics Final Notes: CHAPTER 1: What is economics? We want more than we can get. Our inability to satisfy all of our wants is called scarcity. All resources are finite even if they are abundant.
More informationUnit II: Supply, Demand, and Consumer Choice Problem Set #2
1. /20 4. /30 2. /20 5. /10 3. /10 6. /10 Total: /100 Name: Team: Unit II: Supply, Demand, and Consumer Choice Problem Set #2 1. EXPLAIN an experience or example that shows the real world application of
More informationLesson-28. Perfect Competition. Economists in general recognize four major types of market structures (plus a larger number of subtypes):
Lesson-28 Perfect Competition Economists in general recognize four major types of market structures (plus a larger number of subtypes): Perfect Competition Monopoly Oligopoly Monopolistic competition Market
More informationMaking choices in a world of scarcity means we must pass up some goods and services. Every decision we make is a trade-off:
Lecture Notes Chapter 1 - The Art and Science of Economic Analysis Introduction Economics is about choices. Definition: Scarcity: A resource is scarce when it is not freely available - when its price exceeds
More informationEcon Principles of Microeconomics - Assignment 1
Econ 2302 - Principles of Microeconomics - Assignment 1 Multiple Choice Identify the choice that best completes the statement or answers the question. 1. A likely effect of government policies that redistribute
More informationVANCOUVER ISLAND UNIVERSITY. ECON100: Principles of Economics, Spring 2013 MIDTERM EXAM I
VANCOUVER ISLAND UNIVERSITY ECON100: Principles of Economics, MIDTERM EXAM I Name (Last, First): ID #: Signature: THIS EXAM HAS TOTAL 10 PAGES INCLUDING THE COVER PAGE Instructions: Total marks 65 and
More informationElasticity and Taxation
Elasticity and Taxation Important Knowledge Elasticity is the measure of responsiveness of one thing to another Price Elasticity of Demand is the measure of responsiveness of price to a change in quantity.
More information1) Your answer to this question is what form of the exam you had. The answer is A if you have form A. The answer is B if you have form B etc.
This is the guide to Fall 2014, Midterm 1, Form A. If you have another form, the answers will be different, but the solution will be the same. Please consult your TA or instructor if you think there is
More informationExemplar for Internal Achievement Standard. Economics Level 3
Exemplar for Internal Achievement Standard Economics Level 3 This exemplar supports assessment against: Achievement Standard 91401 Demonstrate understanding of micro-economic concepts An annotated exemplar
More informationEcon 251 Spring Exam 1 Pink
Exam 1 Pink Susan has only 3 options for dinner: pizza, Subway or pasta. Going out for pizza is worth $10 to her; getting Subway is worth $8; and pasta is worth $12 to her. The purchase price of each dinner
More information1. T F The resources that are available to meet society s needs are scarce.
1. T F The resources that are available to meet society s needs are scarce. 2. T F The marginal rate of substitution is the rate of exchange of pairs of consumption goods or services to increase utility
More informationMicro Economics M.A. Economics (Previous) External University of Karachi Micro-Economics
Micro Economics M.A. Economics (Previous) External University of Karachi Micro-Economics Annual Examination 1997 Time allowed: 3 hours Marks: 100 Maximum 1) Attempt any five questions. 2) All questions
More informationBremen School District 228 Social Studies Common Assessment 2: Midterm
Bremen School District 228 Social Studies Common Assessment 2: Midterm AP Microeconomics 55 Minutes 60 Questions Directions: Each of the questions or incomplete statements in this exam is followed by five
More informationIB Economics Competitive Markets: Demand and Supply 1.4: Price Signals and Market Efficiency
IB Economics: www.ibdeconomics.com 1.4 PRICE SIGNALS AND MARKET EFFICIENCY: STUDENT LEARNING ACTIVITY Answer the questions that follow. 1. DEFINITIONS Define the following terms: [10 marks] Allocative
More informationElasticity of Demand
Elasticity of Demand Elasticity of Demand The law of demand states that an increase in price causes a decrease in quantity demanded (and vice-versa) Question: How much quantity demanded changes in response
More informationLesson-9. Elasticity of Supply and Demand
Lesson-9 Elasticity of Supply and Demand Price Elasticity Businesses know that they face demand curves, but rarely do they know what these curves look like. Yet sometimes a business needs to have a good
More informationSAMPLE FINAL. Part I - Multiple Choice Questions:
Part I - Multiple Choice Questions: SAMPLE FINAL 1. Which of the following is not a characteristic of a perfectly competitive market? a. Firms are price takers. b. Firms have difficulty entering the market.
More informationEcon 300: Intermediate Microeconomics, Spring 2014 Final Exam Study Guide 1
Econ 300: Intermediate Microeconomics, Spring 2014 Final Exam Study Guide 1 Chronological order of topics covered in class (to the best of my memory). Introduction to Microeconomics (Chapter 1) What is
More informationECONOMICS (TC5) TECHNICIAN DIPLOMA IN ACCOUNTING COMPANY LAW (TC12) THE INSTITUTE OF CHARTERED ACCOUNTANTS IN MALAWI
ECONOMICS (TC5) TECHNICIAN DIPLOMA IN ACCOUNTING COMPANY LAW (TC12) MALAW T THE INSTITUTE OF CHARTERED ACCOUNTANTS IN MALAWI I N NOT FOR SALE e Institute of Chartered Accountants in Malawi 2017 e Institute
More informationEastern Mediterranean University Faculty of Business and Economics Department of Economics Spring Semester
Eastern Mediterranean University Faculty of Business and Economics Department of Economics 2015 16 Spring Semester ECON101 Introduction to Economics I First Midterm Exam Duration: 90 minutes Answer Key
More informationLabour Demand Lecturer: Dr. Priscilla T. Baffour
Lecture 3 Labour Demand Lecturer: Dr. Priscilla T. Baffour Determinants of Short Run Demand for Labour The wage rate: The wage rate is a very important determinant of labour demand. Thus the higher the
More informationIntroduction. Learning Objectives. Chapter 24. Perfect Competition
Chapter 24 Perfect Competition Introduction Estimates indicate that since 2003, the total amount of stored digital data on planet Earth has increased from 5 exabytes to more than 200 exabytes. Accompanying
More informationBACHELOR OF BUSINESS. Sample FINAL EXAMINATION
BACHELOR OF BUSINESS Sample FINAL EXAMINATION Subject Code : ECO201 Subject Name : LABOUR ECONOMICS This examination carries 50% of the total assessment for this subject. Examiner(s) Moderator(s) Joyce
More informationWhat is Economics? Economics is the study of how we the people engage ourselves in production, distribution and consumption of goods and services in a society. Normative economics: Normative economics
More information6) The mailing must be postmarked by June 15. 7) If you have any questions please me at
Examination Instructions: 1) Answer the examination only after you have read the honesty pledge below. 2) The multiple choice section will be taken in WebCT and a tutorial for using WebCT is to be found
More information(per day) Pizzas. Figure 1
ECONOMICS 10-008 Dr. John Stewart Sept. 25, 2001 Exam 1 Detailed solution for one Form of the Midterm: The general question are the same for all forms but some questions differ in details so correct answer
More informationShort-Run Costs and Output Decisions
Semester-I Course: 01 (Introductory Microeconomics) Unit IV - The Firm and Perfect Market Structure Lesson: Short-Run Costs and Output Decisions Lesson Developer: Jasmin Jawaharlal Nehru University Institute
More information2000 AP Microeconomics Exam Answers
2000 AP Microeconomics Exam Answers 1. B Scarcity is the main economic problem!!! 2. D If the wages of farm workers and movie theater employee increase, the supply of popcorn and movies will decrease (shift
More informationSample. Final Exam Sample Instructor: Jin Luo
Final Exam Instructor: Jin Luo Multiple Choice (2 *30 = 60) Identify the letter of the choice that best completes the statement or answers the question. 1. Price takers refer to buyers and sellers in a.
More informationMICROECONOMICS SECTION I. Time - 70 minutes 60 Questions
MICROECONOMICS SECTION I Time - 70 minutes 60 Questions Directions: Each of the questions or incomplete statements below is followed by five suggested answers or completions. Select the one that is best
More informationEdexcel (B) Economics A-level
Edexcel (B) Economics A-level Theme 1: Markets, Consumers and Firms 1.3 Introducing the Market 1.3.3 Price determination Notes Equilibrium price and quantity and how they are determined This is when supply
More informationCASE FAIR OSTER PRINCIPLES OF MICROECONOMICS E L E V E N T H E D I T I O N. PEARSON 2014 Pearson Education, Inc. Publishing as Prentice Hall
PRINCIPLES OF MICROECONOMICS E L E V E N T H E D I T I O N CASE FAIR OSTER PEARSON Prepared by: Fernando Quijano w/shelly Tefft 2 of 50 Demand, Supply, and Market Equilibrium 3 CHAPTER OUTLINE Firms and
More informationPPJNI" I IFIITIIBIH UI'IIVERSITY EXAMINER(S) FACULTY OF MANAGEMENT SCIENCES QUALIFICATION: BACHELOR OF ECONOMICS
I IFIITIIBIH UI'IIVERSITY OF SCIENCE HI ID TECHNOLOGY FACULTY OF MANAGEMENT SCIENCES DEPARTMENT OF ACCOUNTING, ECONOMICS AND FINANCE QUALIFICATION: BACHELOR OF ECONOMICS QUALIFICATION CODE: 07BECO LEVEL:
More informationThursday, October 13: Short and Long Run Equilibria
Amherst College epartment of Economics Economics 54 Fall 2005 Thursday, October 13: Short and Long Run Equilibria Equilibrium in the Short Run The equilibrium price and quantity are determined by the market
More informationExam 1. Pizzas. (per day) Figure 1
ECONOMICS 10-008 Dr. John Stewart Sept. 30, 2003 Exam 1 Instructions: Mark the letter for your chosen answer for each question on the computer readable answer sheet using a No.2 pencil. Note a)=1, b)=2
More informationECON 311 MICROECONOMICS THEORY I
ECON 311 MICROECONOMICS THEORY I Profit Maximisation & Perfect Competition (Short-Run) Dr. F. Kwame Agyire-Tettey Department of Economics Contact Information: fagyire-tettey@ug.edu.gh Session Overview
More informationMicroeconomics. More Tutorial at
Microeconomics 1. Suppose a firm in a perfectly competitive market produces and sells 8 units of output and has a marginal revenue of $8.00. What would be the firm s total revenue if it instead produced
More information